Local government finance crisis: corroding democracy.

February 28, 2024
1 min read


Local government finances in the UK are facing a crisis due to chronic underfunding, leading to severe consequences for communities and services. With a drop in spending power of around 50% since 2010, many councils are on the brink of financial collapse, with some declaring effective bankruptcy. The current system limits councils’ ability to innovate or raise revenues, leading to cuts in essential services and a deterioration in quality of life for residents.


The article highlights the severe crisis facing local government finance in the UK. It emphasizes the impact of chronic underfunding on council services, with a drop in spending power of around 50% since 2010. The consequences of this underfunding are dire, with many councils on the brink of financial collapse and some, like Birmingham, Woking, and Nottingham, already declaring effective bankruptcy through section 114 notices.

The article points out that the cost of living crisis further exacerbates the financial strain on councils, impacting vulnerable individuals the most. The current system also limits councils’ ability to generate revenue, with council tax rates effectively capped and restrictions on borrowing. This leads to cuts in essential services and a deterioration in the quality of life for residents, ultimately breeding disillusionment and public anger.

Potential remedies suggested in the article include stabilizing local government finance with multiyear funding settlements, allowing for more transfer capacity between authorities, and reforming council tax based on outdated property valuations. The article also calls for greater autonomy for councils to generate and retain their revenue, but notes that political feasibility and Treasury control pose significant challenges.

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